Interactive comparison tool · Updated June 2026
FDVSSIP
FD vs SIP - which investment grows your money faster in 2026? Compare corpus, tax impact, and year-by-year growth with real bank rates.
Final Corpus Comparison
FD vs SIP: Which Is the Better Investment in 2026?
The FD vs SIP debate is one of the most searched personal finance questions in India - and for good reason. Fixed Deposits (FDs) offer capital safety and guaranteed returns. Systematic Investment Plans (SIPs) in equity mutual funds have historically delivered 12-15% CAGR, significantly outpacing FDs over the long term. Which is better depends entirely on your investment horizon, risk appetite, and financial goal.
As of June 2026, top bank FD rates range from 6.45% (SBI) to 7.10% (HDFC Bank, ICICI Bank) for general depositors, and up to 9%+ from small finance banks. Meanwhile, the Nifty 50 has delivered a 10-year CAGR of approximately 13.4%, illustrating the long-term advantage of equity SIPs for patient investors.
A ₹10,000/month SIP at 12% CAGR for 10 years grows to ₹23.2 lakh. The same ₹10,000/month in a 6.5% FD grows to only ₹16.6 lakh - a difference of ₹6.6 lakh. Over 20 years, SIP at 12% delivers ₹99.9 lakh versus FD's ₹47.5 lakh - more than double.
FD vs SIP: Quick Comparison (2026)
| Factor | Fixed Deposit (FD) | SIP (Equity MF) |
|---|---|---|
| Returns (2026) | 6-7.1% p.a. (top banks) | 10-15% CAGR (historical) |
| Risk Level | Very Low (DICGC insured up to ₹5L) | Moderate to High (market-linked) |
| Investment Mode | Lumpsum (one-time deposit) | Monthly recurring (auto-debit) |
| Minimum Amount | ₹1,000 (SBI, most banks) | ₹500/month (most funds) |
| Lock-in Period | 7 days - 10 years (flexible) | None for open-ended funds |
| Liquidity | Premature withdrawal (with penalty) | Redemption in T+2 / T+3 days |
| Tax on Returns | Slab rate every year; TDS above ₹40k | 12.5% LTCG above ₹1.25L/year |
| Inflation Beating | Rarely - post-tax real return ~1-2% | Yes, consistently over 7+ years |
| Section 80C Benefit | 5-year tax-saving FD only | ELSS SIP (3-year lock-in) |
| Ideal Horizon | 1-5 years | 7+ years |
| Best For | Risk-averse, emergency funds, retirees | Long-term wealth, retirement, goals |
Latest Bank FD Interest Rates - June 2026
Rates shown are for general citizens on deposits below ₹3 crore. Senior citizens typically earn 0.50% extra.
| Bank | 1 Year | 2-3 Years | 5 Years | Best Rate |
|---|---|---|---|---|
| SBI | 6.25% | 6.30% | 6.05% | 6.45% (444 days, Amrit Vrishti) |
| HDFC Bank | 6.60% | 7.00% | 7.00% | 7.10% (15-18 months) |
| ICICI Bank | 6.70% | 7.00% | 7.00% | 7.10% (15 months) |
| Axis Bank | 6.70% | 7.10% | 7.00% | 7.10% (1-2 years) |
| Kotak Mahindra Bank | 7.10% | 7.10% | 6.20% | 7.10% (1 year) |
| Bank of Baroda | 6.25% | 6.50% | 6.50% | 6.85% (399 days) |
| Post Office (POTD) | 6.90% | 7.00% | 7.50% | 7.50% (5 years, backed by Govt.) |
| Suryoday Small Finance Bank | 8.25% | 8.60% | 8.25% | 9.01% (999 days) |
* Rates are indicative as of June 2026. Verify directly with the bank before investing. Small finance bank deposits above ₹5 lakh are not DICGC-insured.
FD vs SIP: Worked Example Over 10 Years
Let's compare two investors - Priya and Rahul - who both have ₹10,000 per month to invest for 10 years:
- Monthly: ₹10,000 × 12 = ₹1.2L/year
- Rate: 6.5% p.a. (compounded quarterly)
- Total invested: ₹12 lakh
- Total corpus at 10 years: ₹16.6 lakh
- Gains: ₹4.6 lakh (pre-tax)
- Tax (30% slab): ~₹1.38 lakh
- Post-tax corpus: ~₹15.2 lakh
- Monthly: ₹10,000/month in Nifty 50 Index Fund
- Expected CAGR: 12% p.a.
- Total invested: ₹12 lakh
- Total corpus at 10 years: ₹23.2 lakh
- Gains: ₹11.2 lakh (LTCG applies after 1 yr)
- Tax: 12.5% LTCG on gains above ₹1.25L/yr
- Post-tax corpus: ~₹21.5 lakh
When Should You Choose SIP Over FD - or Vice Versa?
Choose SIP if you:
Choose FD if you:
FD vs SIP Tax Comparison in India (2026)
Tax efficiency is one of the biggest - and most overlooked - advantages of SIP over FD. Here's how each is taxed under current Indian tax laws (FY 2025-26 / AY 2026-27):
FD Tax Rules
- • Interest is added to your income and taxed at slab rate every year, even if not withdrawn
- • TDS at 10% if annual interest > ₹40,000 (₹50,000 for senior citizens)
- • No indexation benefit, no partial tax exemption
- • 5-year tax-saving FD qualifies for Section 80C deduction up to ₹1.5 lakh
- • Effective post-tax yield for 30% slab: 7% FD → ~4.9% real return
Equity SIP Tax Rules
- • LTCG at 12.5% on equity gains above ₹1.25 lakh/year (held 12+ months)
- • STCG at 20% if redeemed within 12 months
- • Gains below ₹1.25 lakh/year are completely tax-free
- • ELSS SIP qualifies for Section 80C (3-year lock-in, vs 5-year for tax FD)
- • Effective post-tax yield for 30% slab: 14% SIP → ~12.25% real return
Rupee Cost Averaging: SIP's Hidden Superpower
One of SIP's most powerful advantages over a lumpsum FD is rupee cost averaging (RCA). Because you invest a fixed ₹ amount every month, you automatically buy more mutual fund units when the market is cheap and fewer units when it is expensive. Over time, this drives your average cost per unit down - without needing to time the market.
| Month | SIP Amount | NAV (₹) | Units Bought |
|---|---|---|---|
| January | ₹10,000 | ₹50 | 200.0 |
| February | ₹10,000 | ₹40 | 250.0 |
| March | ₹10,000 | ₹45 | 222.2 |
| April | ₹10,000 | ₹55 | 181.8 |
| May | ₹10,000 | ₹60 | 166.7 |
| June | ₹10,000 | ₹52 | 192.3 |
| Total (6 months) | ₹60,000 | Avg NAV: ₹50.3 | 1,213 units |
With the average NAV at ₹50.3, the investor's effective cost is ₹60,000 ÷ 1,213 = ₹49.5 per unit - lower than the simple average NAV of ₹50.3. This "buy more when cheap, less when expensive" effect builds quietly over years.
FD vs SIP: Which Is Better for Different Financial Goals?
| Goal | Horizon | Target Corpus | Recommended |
|---|---|---|---|
| Emergency Fund | Anytime | 3-6 months expenses | FD / Liquid Fund |
| Vacation / Travel | 1-2 years | ₹1-5 lakh | FD |
| Car Purchase | 3-5 years | ₹5-15 lakh | FD / Debt Fund |
| Child's Education | 8-15 years | ₹25-75 lakh | SIP (Equity MF) |
| Home Down Payment | 5-10 years | ₹10-30 lakh | SIP + FD split |
| Retirement Corpus | 15-30 years | ₹1-5 crore | SIP (Equity MF) |
| Tax Saving (80C) | 3 or 5 years | Up to ₹1.5L/yr | ELSS SIP (3 yr) or Tax FD (5 yr) |
| Regular Income (Retired) | Ongoing | Monthly cashflow | FD / SWP from MF |
₹10,000/Month: FD vs SIP Corpus at Every Milestone
Assuming FD at 6.5% p.a. (quarterly compounding) and SIP at 12% CAGR. Pre-tax figures shown.
| Years | Total Invested | FD Corpus | SIP Corpus | SIP Advantage |
|---|---|---|---|---|
| 3 yrs | ₹3.6L | ₹4.0L | ₹4.3L | +₹0.3L |
| 5 yrs | ₹6.0L | ₹7.0L | ₹8.2L | +₹1.2L |
| 7 yrs | ₹8.4L | ₹10.3L | ₹13.2L | +₹2.9L |
| 10 yrs | ₹12.0L | ₹16.6L | ₹23.2L | +₹6.6L |
| 15 yrs | ₹18.0L | ₹29.5L | ₹50.0L | +₹20.5L |
| 20 yrs | ₹24.0L | ₹47.5L | ₹99.9L | +₹52.4L |
| 25 yrs | ₹30.0L | ₹72.5L | ₹187.9L | +₹115.4L |